Drugi jezik na kojem je dostupan ovaj članak: Bosnian
By Miša Lukić, New Startegy
I’ve known I was going to work in marketing since I was in high-school at the First Economics High School in Belgrade. The best years of my life have been spent working at marketing agencies with incredibly creative and interesting people, people of a sort no other profession attracts. Whenever people talk today about how companies have to be diverse and include people with different forms of expertise, views, attitudes, genders, cultures, and every other identity category imaginable, it makes me reflect that marketing and advertising agencies always were such companies and that diversity was one of the things that made us so unique and so creative.
For fully a quarter of a century I was in the upper echelons of full-service marketing agencies, and for the final two years of my career in marketing at the helm of Publicis One, with responsibility for 30 countries, in an environment where creative media, PR, digital and all the other types of specialised agency were all equally represented. For five years, I taught Integrated Marketing Communication to students taking a master’s in Advertising and Media (FDU – Faculty of Dramatic Arts).
But anyone who knows me knows that, despite my convictions and my love for every field found in an integrated agency, a bit more of my heart has always belonged to the creative agencies.
Those feelings helped persuade me to write this article and offer an objective analysis pointing to problems in the advertising industry and some solutions, especially given how poorly the creative agencies have, in my view, navigated transition, which we have all been dealing with for more than a decade now.
I would like to point out that, even if I officially changed profession two years ago, I am still fully involved in the marketing industry, which is an integral part of the business design industry that is now my focus. All the observations and criticisms of the advertising industry offered in this text are thus a form of deeply felt self-critique because I was a part of that industry until recently.
Another disclaimer. My text refers throughout to the “advertising industry”, by which I mean the marketing and communication agencies that long ago dropped the term as too narrow to describe their work. Some may also fault me for not using the local word for advertising – oglašavanje. My reason for not doing so is that I consider the English word to be the more widely accepted term both within and outside the profession, which most people understand as referring to paid advertising targeting the consumer for an advertiser, as against other types of communication that involve various indirect approaches to getting the message across.
That’s why I am giving here the official Wikipedia definition of the advertising industry:
The advertising industry is the global industry of public relations and marketing companies, media services, and advertising agencies – largely controlled today by a few holding companies (WPP, Omnicom, Publicis Groupe, Interpublic and Dentsu). It is a global, multi-billion-dollar business that connects manufacturers and consumers.
But first, let’s go back in time about a decade.
SHIFT HAPPENS was the title of a presentation I gave at the 2009 Vienna conference of the European Association of Communications Agencies (EACA). The conference was attended by all the major European agencies, media, and clients, and its central theme was the ongoing global economic crisis and its impact on the advertising industry. I was privileged to be one of two representatives from Eastern Europe invited to this influential gathering. To the surprise of many in the audience, my presentation was not about the economic crisis. My aim was to point out impending essential changes and the coming transformation of our industry and I presented a vivid picture of the ongoing economic crisis as a short-term disaster that should shift our focus towards the bigger challenge ahead, a challenge the industry wasn’t ready for but was nonetheless steadily approaching, like a fragile vessel approaching a waterfall.
Everything I predicted back then and so many times since has unfortunately come to pass.
A superficial glance at the advertising budgets for major clients and total global expenditure on advertising, up every year, would not suggest the advertising industry has a significant problem. The global advertising industry has been growing consistently at an average annual rate of 4% over the past few years thanks largely to investment in digital media. Last year, the total global advertising market exceeded 560 billion dollars.
The global advertising budget was expected to grow more than 7% this year, because of the Olympic Games and the American elections. Without the COVID-19 epidemic and the boycott of social media for racism, it would therefore have been significantly above 600 billion dollars.
Given these figures, the advertising industry and the five major marketing corporations named above would not seem to have much reason to fear for their futures. Unfortunately, that is not so. There is what one might call a state of emergency that is completely unrelated to the pandemic and the other negative socio-political external factors that have only worsened an already catastrophically bad situation in the advertising industry.
I would even go so far as to state categorically that if the marketing giants don’t transform themselves soon they will collapse within five years, causing the entire industry to implode.
Why do I think so?
The most objective measure of an industry’s “health” is how happy its key stakeholders, the interested parties that make up the industry, are. The key stakeholders in advertising are the investors or shareholders, consumers, employees, and clients.
Let’s tackle them one at a time.
Investors / Shareholders
If you had invested 100 000 EUR in WPP Group stocks five years ago *, they would now be worth around 33 000 EUR. You would have lost two thirds of your initial investment. If you had invested that same money in Dentsu you would have lost around 60% of your capital. The same money invested in Publicis Group five years ago would now be worth around 39 000 EUR, which means you would have lost half of your investment. The remaining two major corporations fared better, but still poorly. After five years, a 100 000 EUR investment in Omnicom Group stock would be worth 74 000 EUR, while the same investment in Interpublic Group stock would be worth 86 000 EUR.
If instead of investing in marketing agencies, you had put your money into Microsoft five years ago, you would now have around 480 000 EUR. With NETFLIX, you would have around 565 000 EUR, and Amazon would have brought in more than 720 000 EUR!
Imagine how the people who invested in the world’s largest marketing agencies must feel right now. There can be very few investors around the world less happy than those who put their money into the advertising industry and its five leading companies.
At the moment, it seems crazy that anyone might invest or remain a shareholder in marketing agencies rather than sending their money towards Google, Apple, Facebook, or Amazon… It is equally difficult to believe the major representatives of the creative industry managed to achieve such catastrophic financial results over a five year period when everyone, from the governments of the most-developed countries to the most influential business leaders, was promoting creativity as the main quality needed for the global economy and private businesses to survive and develop.
Instead of becoming the leaders of digital transformation, the marketing giants in the advertising industry have turned out its biggest losers. Very few predicted this, including the many justifiably unhappy shareholders.
But then, maybe the situation is not quite as grim as shareholders think.
What about the consumers of advertising, that is the consumers advertising targets?
For decades they have been reacting positively to advertising messages and supporting the brands that advertise the most. Instead of an answer, I have an intriguing question.
Do you know what the biggest active global boycott is?
Let me help you out… its not a boycott of non-democratic racist regimes or of those recklessly destroying the planet and bringing about catastrophic climate change or of those contributing to global inequality or injustice of any kind.
The biggest boycott in the world is of advertising.
Research has shown that by the end of 2017 more than 600 million devices had installed ad-blocking software. That was a third of total internet users. It may sound incredible, but GlobalWebIndex/Global Ad-Blocking Behavior’s most recent report estimates that around 47% of all internet users worldwide use some kind of ad-block. Over 2 billion people on the planet are actively boycotting advertising messages. The reasons most commonly given by users are that there are too many advertisements, ads contain irrelevant and irritating messages, are an invasion of privacy, and involve the misappropriation of personal information, etc.
This shows that the advertising industry cannot count on its consumers as an ally. Over the past decade, with increasing access to information in ways that they find more relevant to them, they have become advertising’s major rivals.
You can conclude for yourselves what this means for the future of an advertising industry whose main goal is to connect service and product providers with those very consumers.
Maybe there is some hope here?
If the advertising industry still attracts the best and most creative representatives of upcoming generations, then it may be able to find a way to transform itself.
So, let’s take a look at the attractiveness of working in the industry.
According to leading global research, advertising is no longer a popular choice of profession, especially amongst the young. A number of surveys around the world, but especially in America, indicate that as a profession advertising has dropped down the ladder of trustworthiness, even compared to professions that are traditionally not well trusted. A 2018 study by Gallup in the USA (the biggest advertising market in the world) revealed that advertising is now one of the top 5 least trusted professions, alongside politicians, car salesmen, telemarketers, and lawyers.
Gen Z and Millennials tend to have the harshest opinion of our profession, which they associate with manipulation and a lack of integrity. Working in marketing agencies is also associated with overtime (often more than ten hours a day), which conflicts with young people’s ideas about work-life balance. Working in advertising is no longer perceived as glamorous or prestigious or, given its impact, even meaningful, which is high up on the Millennial priority list.
Given that Millennials will represent 75% of the global labour force by 2025, this will have far-reaching consequences for the industry, which may well be even more negative than those discussed above.
Equally important is that advertising is no longer one of the better paying industries, which only serves to reduce the incentive for choosing it as a career.
On the other hand, the situation with current employees may actually be even worse. They are totally burnt out, demotivated, and exhausted. On average, a third of employees leave their jobs at the marketing agency they work for every year, and they are increasingly leaving the industry. The best are usually the first to leave.
This is disheartening for an industry that was once one of the most sought after to work in and that brought together the most creative and capable young people on the planet.
Clients / Advertisers
One potentially extremely dangerous and relatively immediate consequence of all this for the marketing agencies is that in the current climate clients no longer believe that agencies can help them with their businesses in the ways they did before. Nor do they believe the agencies can radically transform themselves.
Over the last decade, marketing communication dropped several rungs in terms of impact and importance in the eyes of clients. Marketing agencies have fallen even lower, as reflected in the pricing of their services and the devaluation of their relationship with clients, which is no longer an equal partnership.
The best example of this is how this century differs from the last. The advertising industry used to play a major role in developing clients’ businesses and brands, but in the 21st century it has played at best a minor role in creating or growing the most successful new companies, from Facebook, Google, Apple, Uber, Airbnb, Netflix, and Amazon, to Tesla, etc.
Take the car industry as an example, an industry that is one of the top spenders on advertising worldwide, and we can see where future trends are headed. Mercedes invests an average of $926 in advertising per car. Tesla has spent less than $6.5 per vehicle for their newest model (the Model 3). Anyone who follows the automobile industry knows how successful Tesla has been, in terms of the company’s valuation, compared to any other automobile maker, including Mercedes. The company’s success is clear from the fact that it recently overtook Toyota to become probably the highest-valued automobile company in the world. Tesla is now worth 210 billion dollars, which is more than global giants like Disney, Coca-Cola, and Cisco.
To sum up, the advertising industry is not in good standing with its shareholders, its reputation is even worse among consumers, and the situation is even more dire with current and future employees. The consequence of all this, and it will only get worse with time, is that the industry’s standing with the clients it directly depends on, the people with the budgets, will only continue to deteriorate.
TO SOLVE A PROBLEM, YOU HAVE TO UNDERSTAND IT FIRST
To understand what has really happened and, more importantly, what we have to do to turn this highly undesirable situation around, we need to gain a better understanding of the what underlay the advertising industry’s incredible rise and even more incredible fall, which is unique by many criteria.
From Alchemy to Distribution
The first and main reason is that the results advertising brought its clients were achieved by a process that, believe it or not, is best compared to that of ALCHEMY!
Marketing agencies turned products into brands relatively quickly and multiplied their value by doing so. This is comparable to the alchemist’s aspiration of turning base metals into gold. What the alchemists could not do in the Middle Ages advertising mages did in the 20th.
The proof of this is the fact that the leading businesspeople of the last century singled out brands as their business’s most valuable asset. Companies with strong brands had a significantly higher valuation on the stock market or when being sold (thanks to the goodwill bonus) than those whose forms of business were purely transactional and lacked a developed brand.
Consumers of advertising loved advertisements and watched advertising blocks like they were high quality entertainment. They even paid to watch advertising at events like the Night of the Reklamožderi/Publivores/AdEaters, just one of several concepts developed in France that spread successfully around the world.
What was more, back then the biggest and most prestigious clients considered the agencies their equals and knew that the future of their most valuable commodities, their brands, lay in their hands.
So what happened during the first two decades of this century to force the industry to fight for its place in the premier league of leading global industries?
It started with the advent of the internet and its influence on all spheres of life, including business communications.
Before the advent of the internet and social networks, people used traditional media to keep informed. Industrialisation and mass production had created a demand for mass media, which were financed by the largest companies, whose aim was to expand even more and grow on a global scale.
The media were a source of information and fun. Advertisers were a way to finance media content in exchange for ad breaks that communicated commercial messages to consumers.
For a while, this compromise suited everyone. Consumers were informed and entertained for free, or at significantly less than the real cost, while the media enjoyed generous revenues from advertisers and expanded their influence, which in turn increased their revenues even more, while the companies that invested in advertising saw better returns than on any other form of (legal) investment.
It was still, however, a compromise. One that suited for a while, under particular circumstances, but only until a choice came along.
Consumers were only exposed to information advertisers wanted to sponsor. Perceptions were increasingly divorced from reality. Advertisers and agencies became more and more manipulative in their messaging and increasingly intrusive and predatory on their customers in terms of volume. Even the media, which were supposed to be objective and on their audience’s side, proved unwilling to air their advertisers’ dirty laundry, as it would have meant risking huge losses. It was far easier, and smarter, to attack politicians or the powerful of day than to talk openly or negatively about the companies investing huge sums in advertising and so with the fate of the media in their hands.
The internet changed all that. First, it meant traditional media had lost their primacy, because it transformed everyone in the world into the medium.
Second, companies soon realised that what they had been doing before the internet was not two-way communication. They had to face up quickly to the undeniable end of the age of monologue, of pre-prepared or filmed messages that could be repeated until customers started to believe them.
For the first time in history consumers could communicate as equals and express their thoughts for others to see. For the first time people could access quality and credible content separately from the one-sided messages that advertisers previously relied upon.
By creating new sources of information and connecting with other consumers and their experiences people started to realise that much of the information advertising was feeding them (cheapest, best, most-effective) was just not true.
Trust was lost. Pandora’s box was opened.
Unfortunately, the advertising industry did not understand the severity of its own situation and continued applying its old strategy of interruption instead of interaction via digital media. They saw the internet as just another media innovation, like TV or radio.
But they weren’t getting the results. Nothing was the same anymore!
Consumers today trust booking.com more than any hotel chain’s advertising. They trust comments from people who have read the book or watched the film more than the advertising messages of producers or publishers. They trust independent price comparison sites more than they trust advertisers who claim their product or service offers the best value on the market. They trust consumers like themselves and independent critics rather than advertisers or the advertising industry when picking a car, computer, television, food, telecommunication services, pharmaceutical products, cosmetics…
For the first time in history consumers have options and can pick for themselves. The advertising industry didn’t adapt because it didn’t want to believe the golden age was over.
Creative agencies adapted especially poorly in spite of having the most scope for transformation. Media and digital agencies rose to the top, taking over as the major marketing giants thanks to advanced software, big data, digital technology, focusing on effectiveness and quantifiability. They focused on digital rather than traditional media.
This helped, of course, but did not address the main cause of the problem. The consumer now had more relevant and more independent sources of information than the advertisements created by advertisers to market their products and services.
Advertising found itself slipping down the ladder of influence over consumer decisions. Who was supplying the information became much more important than the information itself, which made advertisers and advertising the least reliable source, no matter how much and how effectively they shifted the information.
One consequence of media and digital agencies taking over the leadership role and seemingly sempiternal primacy of the creative agencies was to change fundamentally the business marketing agencies are in today.
Overnight, the agencies had been transformed from ALCHEMISTS into DISTRIBUTERS.
No longer alchemists who added to and often doubled the value of a brand and business, agencies suddenly found themselves in the business of information distribution.
Of course, no one is suggesting effective information distribution is not a necessary activity or doesn’t add value for the client. Of course it does, but distribution is nonetheless a totally different business from the one the agencies were in for a hundred years. The key virtues in the distribution business are speed, efficiency, price, standardised services, optimisation, and keeping costs down. Everything the creative agencies were not and don’t do. This required major changes in attitude and how people and costs are managed. Once you’re in the business of distribution, the emphasis shifts to tools that boost efficiency, speed, automatization, access to relevant data and manipulating them, advanced software, A. I., and a focus on impact. This change of business also meant that the price of the services themselves fell considerably below what full-service marketing agencies had been charging before the digital revolution.
From the best business model to the worst
Another feature of the advertising industry that contributed significantly to its incredible rise was its globally standardised business model.
Very few people, even in the advertising industry itself, are aware of how decisive its pricing policy was for its success and growth. It is particularly striking that this business model was both fully standardised and very different from that of any other industry. Not convinced?
Does any other industry in the world sell all its products and services at one price, no matter how much they differ in quality?
Not that I know of. But that is the principle on which the advertising industry worked. All agencies charged the same price, 15% of the overall advertising budget, which they received initially from the media and later from the client directly.
This was incredibly significant for the development of the industry because quality was what mattered and not pricing, unlike any other industry in the world! It was lucrative for agencies to have the best, most creative, and best paid people because it ensured quality and quality brought in the biggest clients with the biggest budgets.
It was also perfect for clients, who were getting the best quality service for the same price as the worst and their only job was to choose the right partner. And even better, the model of open and positive pitches meant they got to “test drive” each partner. Win-Win!
Under pressure from the bigger clients at the end of the 20th century, this unique model was transformed into the worst possible one for the advertising industry. The purported reason was that the old model rewarded agencies for padding their clients’ budgets, which was not in the clients’ best interests. So, agencies were forced to charge for their creativity by the hour, which completely changed the nature and core of the business. The focus shifted from effectiveness to efficiency. Nobody understood that doing this meant everybody lost, including the clients.
Some of the bigger global clients later tried to introduce value-based pricing, but it didn’t work because the criteria were unrealistic and didn’t measure the agencies’ core output. Such failed attempts, based on identifying judge and jury, just widened the gap between the agencies and their clients.
This was the second reason for the rise and fall of the advertising industry, but it was certainly not a less important one.
From turning on to turning off
The third feature specific to the advertising industry is that it is quite definitely the industry most inclined to celebrate its own successes. Considerably more than even the film or any other glamourous industry.
Working in an advertising agency was incredibly prestigious, especially in one of the bigger famous global agencies. I remember an occasion when more than 1000 creative and well-educated young people came from all across the UK to compete for an unpaid internship at the London-based Saatchi & Saatchi agency.
This really is the industry with the most festivals! No other industry even comes close in terms of the number of awards and recognitions received by its employees. The advertising festival in Cannes is for some even more glamourous than the film festival held in the same town, and it is directly compared to the Oscars ceremony. In every region, in every country, there are many organisations, conferences, and festivals every year that award creativity, effectiveness, success, and everything else, in the advertising industry. I repeat, no other industry in the world comes close to its levels of self-celebration.
As well as enjoying the prestige, advertising professionals earned considerably more than the average in other industries. And the job itself was also remarkably interesting and creative. It gave an incredible sense of accomplishment not just to receive all those awards but to see your agency’s clients succeed. Advertising companies also often ran immensely popular socially responsible campaigns that were catalysts for major changes in how problems in wider society were addressed. All of which came together to provide total satisfaction to anyone who chose advertising as their life’s work.
It was when the advertising industry, failing to adapt to the advent of the internet, decided to abandon the business of alchemy for that of distribution, and so allowed itself to be pressured by its major clients into accepting changes to its business model and unique pricing system that the attractiveness of working in advertising agencies started to fade.
The biggest agencies in the world saw their profits under threat, and their shareholders and employees saw it too. Incomes and staff were cut. Those who remained had to work longer hours. The job started to lose its attractiveness and was increasingly a matter of “he who pays the piper calls the tune” and keeping clients at all costs.
The state of the advertising agencies no longer attracted the best and most creative people and had already led to them losing, on average, a third of their best people annually. Most of those people would either migrate to work directly for the client or leave the industry completely.
Did this have to happen and is there any prospect of turning things around?
WHATEVER ELSE YOU LOSE, YOU STILL HAVE YOUR CREATIVITY. KEEP YOUR CREATIVITY, AND YOU CAN HAVE EVERYTHING.
From all the above it’s clear marketing agencies have lost a lot of what they had built up over the past 100 years.
Is there anything left that can turn their new fate around and restore their reputation as alchemists?
Yes, there is! They still have the most valuable thing of all! CREATIVITY!
Just ten years ago creativity in business generally referred to creative industries like advertising, architecture, art, design, fashion, film, music, publishing, R&D, software, gaming, etc.
At the beginning of the 21st century and over the past ten years, creativity and innovation have been acknowledged as key factors in helping both business and society survive and develop.
All the aspects and areas of modern business depend on creative contributions in the form of constant innovation, across all industries, because of the explosion of new technologies, the scope of the available information, and changes in attitudes, convictions, values, and behaviours, especially among the young.
In the 21st century, creativity is what makes the world, and the economy, go round.
Even the UN have cited creativity and innovation as vital for the economic growth of nations in the immediate future. Which is why the UN proclaimed April 21 World Creativity and Innovation Day. According to the findings of a special report on the creative economy conducted jointly by UNESCO and UNDP, creativity and innovation have become the main values and resource of nations in the 21st century.
Even more important for the agencies is that for the first time in history business leaders are citing innovation and creativity as their highest business priorities and counting them amongst the most important contributory factors for their companies’ future success.
According to an IBM study, more than 1500 CEOs from more than 60 countries and 33 industries selected creativity as the most important skill for helping their companies deal with complex problems and adapt to constant change in business and society.
Linkedin calls creative thinking the most sought-after skill in modern times. Other researchers also placed creativity among the top three skills required for leadership and the success of an organisation.
Reports on the topic of managerial excellence (McKinsey, KPMG) also single out creativity as the main requirement for long-term professional success.
It is clear to everyone at this point that creativity isn’t only of relevance for artists and the creative industry. Creativity is an absolute necessity in every segment of business.
Every day business has to deal with new technologies, new customer expectations, new competition from completely different industries or flexible and agile start-ups, and new expectations from employees and new talent.
It needs new creative and innovative solutions for all those problems. And that means completely new business models, innovative products and services, innovative communication, innovative distribution channels, innovative ways to create new income streams outside of the industry core, innovative processes, organisational systems, and structures, an innovative culture, innovative ways of creating loyal consumers, innovation in the fields of rationalisation and cost optimisation, and so many other innovative solutions across every area of business.
But modern companies aren’t ready for all this. And not just their future development but their very survival depends on it. They need help and they are open about looking for it.
In 2014 Adobe conducted a large study, through Forrester Consulting, with senior managers of corporations from all over the world and various industries. The goal was to quantify how much creativity affects business results. The study showed that companies that accepted creativity as a key factor in creating their corporate culture and in managing their business outperformed their competition in all areas of business performance and for all indicators, including revenue growth, market influence, attractiveness to new talent, loyalty, employee engagement, etc. What is especially interesting is that despite all this open support for creativity and innovation, 61% of senior managers don’t consider their companies to be creative which is an incredible opportunity for all the creative organisations and individuals that business needs now more than ever.
Because of all this, we are witnessing a real gold rush fever at the moment for creative consultants and talent that can help companies to be innovative in all aspects of business.
Innovative consulting firms like IDEO, Fahrenheit 212, Innosight, Board of Innovation, Cantina, Doblin, Frog, Altitude, Jump, and Fjord are a hit in the business world.
Most of these innovative consulting firms started independently but were then acquired by a prestigious business consultancy firm, like McKinsey, Capgemini, Accenture, BCG, Deloitte, or Bain & Co, who had realised where trends and client needs were heading, unlike the bigger marketing agencies, which spent millions acquiring digital agencies and IT companies whose business they never really understood.
In 2014, I and my then creative director, Bojke, gave a presentation of almost 200 slides to the regional director of Leo Burnett in London in which we pitched the idea of developing business design as a global service and acquiring Fahrenheit 212, one of the fastest growing innovative agencies at the time. A few years later Capgemini, one of the biggest global business consultancy firms in the world, did what we hadn’t.
It almost beggars belief that the leaders of the biggest creative agencies could not see the opportunity of the century and have failed to adapt their business, services, talents, structure, organisation, processes, and all the other elements of their business model to the new age – the age of creativity!
But I truly believe it is not too late. The path to revitalisation leads towards agencies reviving their creativity and creativity reviving them in turn.
There are many concrete solutions that all agencies will be able to employ in future.
Agencies can even continue to restrict themselves to communication, which will never lose its significance, but they will have to use their creativity to start up a new intelligent, fair and humane conversation that will completely overhaul the modern standard approach to communication, which will include creating completely new channels for communication.
The current prediction is that 60% of communications brands will be using AI assistants, chatbots and algorithms, as well as humanised robots, by 2030. Marketing agencies can help bring about this future even sooner and make it more effective than if it were created exclusively by IT engineers.
Marketing agencies can also offer more structured services to start-ups to help them attract investors, including preparing their pitch presentations or creating video and other presentation materials for them to use in presenting their ideas on popular crowdsourcing platforms like Kickstarter or Indiegogo. Of course, that would also entail a special approach to billing, like ownership shares or a percentage of total investment.
Marketing agencies are famous for their incredibly creative culture, which is currently something companies in all industries are looking for. Why shouldn’t they impart some of their experience and knowledge to their clients and bond with them in this way?
Why shouldn’t creative agencies help clients and their employees gamify (serious play) their businesses and so achieve their business KPIs through fun and games?
As these examples make clear, there are many different ways for marketing agencies to use their creativity and serve clients.
They can do a lot more too, though.
In the 21st century, communication is no longer just storytelling. In the new age communication is more about what you do (story-doing) and what you are (story-being). In my opinion this is the main opportunity for creative agencies.
And that opportunity is for agencies to transform their CREATIVITY into INNOVATION!
To work in business innovation, you need to have the following characteristics:
- Creativity and innovation,
- A deep understanding of people, not just consumers,
- An understanding of business and all its aspects, and
- An understanding of new technologies and ability to predict trends.
Do marketing agencies have all these characteristics?
I believe that most good agencies already contain within their ranks 2/3 of the capacity and capabilities required to become innovative consulting companies.
- Creativity is already in the DNA of most creative agencies. Transferring that creativity from communication to innovating new products and services, new distribution channels, new income streams, and other similar things will not be difficult, so long as they are given a precise and clear project brief.
- When it comes to knowing people, marketing agencies do this better than the innovative companies themselves. Psychology and understanding people have always been a basic work tool for marketing agencies. With big data, modern ways of acquiring personalised data, and by hiring data analysts, agencies can draw on prior experience to become real alchemists in this field, transforming the abundance of unrelated information into gold.
- When it comes to understanding their clients’ businesses, agencies have a certain expertise but should nonetheless recruit seasoned business experts from other industries or from the best business consulting companies, taking care to bring on people whose creativity, curiosity, and energy match the agency culture. Utilising such combinations, agencies can strengthen their knowledge of the business, allowing them to discuss new business challenges with their clients as equals and help them solve those problems through innovation.
- The last but by no means least important aspect relates to familiarity with and understanding of new technologies and an ability to predict trends. Agencies need to work on this area and attract young experts in fields like AI, Blockchain, Augmented reality, IoT, robotics, and other advanced technologies.
New organisation and processes
To succeed in a constantly changing climate means becoming more agile and flexible. Agencies that want to become their clients’ partners in innovation have to increase their agility and adopt a fundamentally different way of working, thinking, and maybe even a new purpose.
In addition to all these characteristics, marketing agencies also need to bring radical change to their organisations and employment processes. They need to rid themselves of any ballast they are still carrying. Its important to turn to a more modern form of horizontal organisation with flexible project leadership that eschews strict hierarchy in favour of shared responsibility and self-discipline.
It is also important to develop a new agile management strategy, of the sort practiced successfully for a number of years now in IT and innovation consulting firms (Scrum).
It is of vital importance that once the marketing agencies of the future have restructured they create open platforms that let them draw on a wider ecosystem so they don’t have to rely exclusively on permanent employees. This will significantly widen the scope of expertise available to them and significantly reduce the pressure of fixed costs, which are currently stifling and overburdening the operations of the bigger agencies.
The success of such business platforms is well illustrated by the fact that 7 of the 12 largest global companies now enjoy the support of such an ecosystem.
By creating such platforms and ecosystems, marketing agencies can become more effective than consulting companies because they can provide a full service, from creating innovation to implementing it, as used to be the case with full-service agencies.
IF NOT US, WHO? IF NOT NOW, WHEN?
It was not the goal of this article to criticise the advertising industry and marketing agencies. It was the goal of this article to inspire them to become again what they deserve to be.
Why shouldn’t the most creative people in the marketing agencies, who know both people and business a lot better than most start-up teams, create innovative ideas that change business and the world? Why wasn’t it people from creative agencies that invented Uber or Airbnb? Why was it a student that came up with Facebook or whatever other social network and not us? Why wasn’t it the agencies that created the freemium pricing strategy? Or that pitched Caterpillar, a company famous for its strong and durable construction machinery, the idea of making durable footwear and shock resistant mobile phones, which it now is making, given the core values of its brand? Why didn’t the agencies predict yoga as an upcoming trend and the gap in the market for yoga equipment (Lululemon)? Why wasn’t it people from creative agencies that came up with the idea of a circus without animals (Cirque du Soleil)? Or agencies that pitched Amazon the “1 Click Order”, one of the global giant’s simplest and most lucrative patents and innovations?
If not us, who? If not now, when?
For more than ten years I have felt that this was the right path for OUR INDUSTRY and I didn’t just sit around and talk about it (storytelling). Two years ago I set out down that path with a few colleagues (story-doing), risking all my savings and reputation (story-being), everything I had gained working in the advertising industry.
This is the road less travelled, a more difficult and challenging road, but one which leads to great rewards. Believe me when I say that just journeying down this road is enough reward in and of itself.
Many won’t understand my call for marketing agencies to retrain and transform themselves into innovative agencies and business design consultants, as by doing it I am directly creating competition for NEW STARTEGY, but I have always believed that a strong market needs not just strong clients but strong and healthy competition.
The advertising industry and marketing agencies deserve a NEW START!